Global Crypto Policy Update - 12/2024

Americas

U.S.: New SEC Chair, ETFs, Tax and Accounting Rules

In early December, President-elect Donald Trump selected Paul Atkins, a former SEC commissioner with a pro-crypto stance, to lead the Securities and Exchange Commission (SEC). Atkins' appointment signals a potential shift toward crypto-friendly policies and could encourage increased institutional participation in the market.

The SEC approved two crypto index ETFs on December 19 - the Hashdex Nasdaq BTC/ETH ETF and Franklin Templeton's Crypto Index ETF. Both funds will feature Bitcoin and Ethereum with an 80/20 average weighting and allow for future additions.

Late December brought clarity on staking taxation when the IRS reinforced its stance that crypto staking rewards are taxable upon receipt.

“Revenue Ruling 2023-14 requires taxpayers who receive staking rewards to report the rewards as income at their fair market value upon having the ability to sell, exchange, or otherwise dispose of them.”

This month also saw the implementation of the Financial Accounting Standards Board's (FASB) guidance from last year, which requires companies to measure crypto assets at fair market value and recognize changes in net income each reporting period. Previously, crypto assets were shown in the statements of US companies at the cost of acquisition less any impairment, meaning only negative price changes were reflected.

FASB develops and issues U.S. Generally Accepted Accounting Principles. A similar global body for International Financial Reporting Standards (IFRS), the IASB, is yet to clarify its stance on crypto assets. IFRS currently treats crypto assets under the 'Inventory held for sale' standard.

Brazil's Central Bank Wants Control

On November 29, Banco Central do Brasil (BCB) issued a proposal to prohibit centralized exchanges from facilitating transfers of stablecoins, such as Tether's USDT, to self-custodial wallets. The measure aims to enhance oversight of virtual asset transactions and mitigate risks associated with unregulated activities. By restricting the flow of stablecoins to self-custodial wallets, the central bank would maintain greater control over the crypto ecosystem within Brazil. The public consultation period for this proposal is open until February 28. We will continue to observe this as it develops.

The Salvadorian Bitcoin Strategy Evolves

After months of negotiations, El Salvador secured a $1.4 billion IMF loan on December 18. The agreement requires significant modifications to the country's Bitcoin policies, including making Bitcoin acceptance optional for businesses and scaling back government involvement in crypto activities, particularly the use of the Chivo e-wallet.

Later El Salvador said it would continue buying Bitcoin and keep its legal tender status despite IMF loan covenants.

Africa

Nigeria Sets Price for Crypto Promotion

Nigeria's Securities and Exchange Commission introduced strict new rules on December 16, requiring cryptocurrency influencers to obtain licenses and disclose earnings by June 2025. The regulations threaten violations with fines of 10 million naira (around $6,400) or imprisonment, aiming to curb unauthorized financial product promotion on social media.

Europe

EU's MiCA Rules Force Tether Off Major Exchanges

As the December 30 MiCA deadline approaches, EU exchanges are preparing to delist Tether's USDT stablecoin. The region's and the world's largest stablecoin by volume lacks the required e-money license, forcing platforms to adapt their trading pairs and liquidity management.

Also effective December 30, 2024, the European Union's Transfer of Funds Regulation (a.k.a Travel Rule) will require crypto-asset service providers (CASPs) to implement enhanced identification measures for crypto transactions exceeding €1,000. This aims to increase transparency and prevent the misuse of crypto for illicit activities by ensuring that both the sender and recipient of such transactions are identified.

Both rules are difficult to implement given the lack of controls over parallel systems of crypto assets, so it will be interesting to observe what will become the main frontier of control for the EU regulators.

Czech Tax Reform Opens Door for Bitcoin Investors

To encourage long-term crypto investment, the Czech Republic announced this month that Bitcoin holdings over three years will qualify for capital gains tax exemption starting January 2025. The policy aims to specifically target non-business holdings with annual crypto trading income under CZK 100,000 (around $4,000).

Eurasia

Ten Russian Regions Go Dark for Crypto Miners

On December 24, Russia unveiled a sweeping six-year mining ban affecting ten regions until 2031. While the ban targets regions like Dagestan and Ingushetia entirely, key mining hubs such as Irkutsk will face seasonal restrictions starting January 2025. The policy is set to protect other consumers in regions with limited electricity supply.

Turkey's $425 Rule Reshapes $170B Local Market

The next day, Turkey enacted legislation requiring identity verification for cryptocurrency transactions exceeding $425. The law targets money laundering concerns in the country's $170 billion crypto sector. Starting February 2025, crypto service providers must collect identifying information for transactions above the threshold.

Asia-Pacific

Japan Eyes Lighter Touch for Middlemen

Japan's Financial Services Agency proposed a new business category for cryptocurrency intermediaries not classified as exchanges. The initiative aims to introduce lighter regulations for entities facilitating crypto transactions without handling customer assets directly.

South Korea's Crypto Tax Takes Three-Year Break

The South Korean government has postponed its 20% cryptocurrency gains tax until 2027. This delay allows more time to develop comprehensive regulatory frameworks while maintaining market growth and providing clarity for investors.

Cambodia's Exchange Ban Hits Global Giants

In early December, Cambodia blocked access to 16 cryptocurrency exchange websites, including industry giants Binance and Coinbase, citing licensing violations under the Securities and Exchange Regulator of Cambodia. While the websites remain inaccessible, mobile applications continue to function.

On December 26, the National Bank of Cambodia (NBC), for the first time, permitted commercial banks and payment institutions to offer services related to Category 1 crypto assets, including stable cryptocurrencies backed by assets. However, unbacked cryptocurrencies like Bitcoin remain banned.